Americans shopping for new homes during May and June were much more optimistic about their personal financial situation than the overall economy, according to the results of the 2009 Builder/American LIVES New-Home Shopper Survey. The full survey results suggest that new-home buyers could be confident enough to lead the economy out of recession if builders can provide the kinds of homes they want to buy. Ninety-five percent of shoppers polled, for instance, characterized the overall economy as “not so good” or “poor.” But only 31 percent saw their personal economic situation that way. The majority of would-be buyers rate their personal finances as the same or getting better.
The Internet survey of 686 people shopping for new homes was done for Builder by American LIVES, a Carmel Valley, Calif.–based research firm. American LIVES obtained prospect lists from builders in top home building states of California, Nevada, Arizona, Texas, Florida, North Carolina, Michigan, and Indiana.
The survey unearthed some other positive sentiment among new-home shoppers. Most of the people surveyed (59 percent) said that it’s an “OK” or “good time” to buy a new home. Moreover, 74 percent said that they are not waiting for the housing market to bottom before they buy. And 55 percent said they want to buy now because they can get more for the money.
Some Yellow Flags
At the same time, the survey unearthed some buyer anxieties that builders will need to overcome. A full 66 percent of new-home shoppers said that they are at least somewhat concerned about potential job loss within their household. Perhaps for that reason, 82 percent of respondents agreed somewhat or strongly that they don’t want to stretch their finances too much to buy a new home.
This result indicated strong demand for smaller homes, including some unexploited demographic niches. “There is a new market for a small home, under 1,300 square feet, with the most energy-efficient features possible,” says Brooke Warrick, president of American LIVES. “These homes should be targeted at single women.”
One of the questions we hoped to answer from the survey was whether buyer priorities have shifted in light of the recent decline in housing values. The survey results confirmed that shoppers are looking more for personal satisfaction from a new-home purchase than investment gain. Nearly four out of five new-home shoppers, for instance, feel strongly that spending time at home with family has become more important. Also, two-thirds agreed with the statement, “I’m not going out as much, so my home is more important.”
Energy—A Strong Draw
The survey revealed that energy efficiency is a stronger hot button with buyers than green features. Half of new-home shoppers, for instance, said they would pay at least an extra $5,000 for energy-conserving features that would add at least $35 a month to their payments. Their favorite investments are high-performance windows, high-efficiency HVAC, and insulation that exceeds code.
“All these energy-saving options are ‘must haves,’” says Warrick, with the exception of solar panels. Warrick believes that energy efficiency is the builder’s ace-in-the-hole in competition against resales. “Builders need to do a better job explaining the benefits of these features to customers.”
New-home shoppers believe that green features are important in new homes, but they won’t pay as much for them. Forty-nine percent of buyers said they would only pay up to $2,000 extra for green features that would add up to $14 a month to monthly payments.